STR data shows Saudi Arabia at the forefront of hotel construction in the Middle East

Last Updated on November 9, 2023 by Ameer Hamza

According to hotel research company STR, Saudi Arabia and the United Arab Emirates have the most active hotel construction markets in the Middle East and Africa. The latest data showed that Saudi Arabia is building more hotels than any other country in the Middle East and Africa, with over 40,000 rooms under development as of March.

The Kingdom has 42,033 hotel rooms, 35.1% of the 119,505 keys currently being built in the area. According to the research, the Kingdom has the most hotel rooms in the region—68,000—followed by the United Arab Emirates (UAE), which adds 44,000 rooms.

Around 119,505 rooms were being built in the Middle East and Africa in March, a 6 percent decrease from March 2022. The four globe regions — Europe, Asia Pacific, the Middle East, Africa, and the Americas — all exhibited a year-over-year fall in hotel building activity. According to STR, the Asia Pacific was the closest to its 2022 comparable.

Meanwhile, the most recent JLL UAE Real Estate Market Overview Report showed that the United Arab Emirates hospitality industry experienced a solid growth trajectory around the first quarter of 2023, driven by a consistent intake of tourists from three major source markets: India, Russia, and Oman. In January and February 2023, Dubai welcomed almost 3.1 million visitors, a 42 percent increase along the same time in the previous year.

Growth Trends of Saudi Arabia’s Hospitality Sector

Knight Frank, an international real estate consultancy, believes that by creating 315,000 hotel keys by 2030, Saudi Arabia is preparing to expand its hospitality industry significantly. He added that, due to this expansion, the number of hotel rooms in Saudi Arabia would surpass the 140,000 keys that Dubai currently has.

One of the Kingdom’s main economic diversification strategies is the growth of the hospitality industry. As Faisal Durrani, Head of Middle East Research, has explained, the volume of hotel room keys anticipated to be given in the Kingdom by 2030 is nothing short of astonishing, with a total likely supply of close to 450,000 hotel rooms.

The UAE presently has roughly 200,000 rooms, including Dubai’s 140,000 keys; therefore, Saudi is gearing up to see nearly 58% more than this amount. Additionally, many new hotels are opening in the major cities due to increased religious and leisure travel to the Kingdom, creating investment opportunities in the hospitality sector.

In addition to adding more than 8,200 rooms and keys to the current supply, the top-performing foreign brands established more than 20 new hotels, some under their names and others through strategic alliances with the top domestic hospitality firms.

The MEA hotel pipeline forecast is still positive despite the downturn in building, and there are now nearly 250,000 hotel rooms under contract. Finally, Statistica reports that the hotel industry in Saudi Arabia is anticipated to bring in $2.51 billion this year and $3.02 billion by 2027.